QQQ Price Channel is Working on a Megaphone Top

QQQ is Likely Working on a Megaphone Top for the Red Price Channel

QQQ is Likely Working on a Megaphone Top for the Red Price Channel

QQQ is working on a megaphone after confirming the red price channel. The price channel has been a move up the bottom of a rising wedge, so the megaphone is a strong favorite to eventually break out downwards.

QQQ is Working on Tops for Some Long-Term Rising Megaphones (Blue & Silver)

QQQ is Working on Tops for Some Long-Term Rising Megaphones (Blue & Silver)

QQQ is working on tops for two long-term rising megaphones (blue and silver on chart) and needs to retrace to the formation bottoms.  A fast top here (green scenario) could set up clean head and shoulders tops for both rising megaphones.

The green scenario could break QQQ out of both into a crash to the blue rising megaphone bottom (orange scenario).

The alternate green scenario is that QQQ reverses near the pink megaphone bottom to form one last larger rising megaphone after breakout from the blue one for a fast move to another new all-time high.

The purple scenario represents a slower topping process in which QQQ morphs the move off the February 2016 low into a rising megaphone top (navy blue).  The slower top would virtually guarantee a more complicated and drawn-out correction to break QQQ out of the blue rising megaphone.  This type of breakout would virtually guarantee a move to another new all-time high before the retrace to 42.

QQQ Long-Term Rising Megaphones

QQQ is Working on Topping Patterns for Two Long-Term Rising Megaphones

QQQ is Working on Topping Patterns for Two Long-Term Rising Megaphones

QQQ is working on a topping pattern for a move within a larger topping pattern within a still larger topping pattern.  It’s forming major tops for two multi-year rising megaphones on the daily/weekly charts (blue and red on chart).

All topping patterns are tricky to trade because it’s so common for them to morph into different topping patterns.  Rising wedges constantly morph into rising megaphones, head and shoulders patterns morph into megaphones, triangles morph into H&S tops and megaphone tops morph into rising megaphone tops.

There is nothing to be done about this but wait for a topping pattern to complete in such a way that a price is a favorite to get moving down on a move that’s likely to be big enough to offer a decent reward on a trade.  Until then you stay long or get long on upwards breakouts from consolidations within the patterns.

So, while QQQ could form a small quick megaphone or H&S top here that is the top before a move that takes the price back to 40 (green scenario), QQQ could also shoot up higher to complete a rising wedge or rising megaphone top before that move, and it could postpone that move by forming a larger megaphone top up here (purple or pink scenarios).